Read This Before You Text Your Customers: The Next Class Action Litigation Minefield Facing Cannabis Companies

A new potential class action minefield cropped up in 2019 – challenges to cannabis companies’ marketing practices under the Telephone Consumer Protection Act (“TCPA”), with one major medical marijuana company already forced to defend its text messaging practices in Florida federal court.

On December 9, a class action complaint was filed in the Northern District of Florida against Trulieve, Inc., alleging that Trulieve transmitted unsolicited text messages offering cannabis products and promotions to several thousands of people, in violation of the TCPA. See Jaslow v. Trulieve, Inc., Case No. 4:19-cv-00592 (N.D. Fla.). The plaintiff seeks a judgment that Trulieve violated the TCPA and injunctive relief in addition to statutory and actual damages. The litigation involving Trulieve represents one of approximately ten federal complaints filed against cannabis companies in 2019 alleging TCPA violations.

If you’re shocked to learn that companies can be sued for texting, it may be equally shocking to learn that our prediction is that the pace of TCPA litigation in the cannabis industry will pick up in 2020.

Here’s a primer on what the TCPA is and steps to avoid liability:

The TCPA, 47 U.S.C. § 227 et seq., generally makes it illegal to place calls (or send text messages) using an automatic dialing system without prior express consent from the recipient. In plain language, if companies want to text consumers, the consumers must agree to it. Failure to do this can result in significant liability. Read on…

The statute is a favorite of the plaintiffs’ class action bar because the TCPA permits damages awards of $500 per call or text (and in certain instances of willful conduct, damages of $1,500 per call or text). It is a strict liability law, i.e., if the texting was not compliant, the court has no choice but to award penalties unless there is some other reason why the claim is improper. Spread across a class of thousands of consumers, those damages totals can easily skyrocket into substantial liability for a company — ranging into tens (or even hundreds) of millions of dollars.

Given plaintiffs’ attorneys focus on the TCPA, all businesses – including those in the cannabis industry – should be aware of the statute’s prohibitions and take careful steps to avoid expensive TCPA lawsuits, including:

Outlining clear policies for TCPA compliance and ensuring that employees who call or text customers are sufficiently trained on those procedures;

Ensuring that consumer contact information and data is updated, so that the correct customers are contacted and no outdated phone numbers are included on marketing lists;

Monitoring consent to ensure that all listed customers have given consent to be called and that customers who have revoked consent are deleted from marketing lists; and

Overseeing third-party vendors who engage in marketing efforts to ensure that the vendors are engaging in appropriate calling and texting practices in TCPA.

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About Our Practice Group

Kelley Drye has extensive experience navigating the rapidly-changing cannabis industry. We represent a multitude of stakeholders in the cannabis ecosystem, from growers and processors, manufacturers and retailers, to investors and financial organizations.